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Tracking Stocks

Valued as a spinoff, but not operated as a spinoff ?

As financial innovations go, tracking stocks have been a bust for a decade and a half. Consider this: From 1984 to 1999, underwriters brought an average of more than 50 equity carve-outs to the Street each year. During that same time period, investment bankers launched a grand total of 23 trackers. That's it.

In a perfect world, things would have stayed that way. In our world, tracking stocks are suddenly popular. This is particularly true at old-economy companies, where managers now seem intent on setting up their new-economy operations as separately valued -- but not truly separate -- businesses. Credit Suisse First Boston, for one, has CSFBdirect for its online brokerage. Sprint has Sprint PCS, which is tied to its wireless business.

Posted in Investing and finance.

The Emperor's New Shares
Tracking stocks are all the rage these days. One management consultant wonders why.
Al Ehrbar - eCFO
April 15, 2000


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